2021 Newfoundland and Labrador budget – Tax highlights
June 01, 2021
Issue 2021-13
In brief
On May 31, 2021, Newfoundland and Labrador’s Minister of Finance, Siobhan Coady, presented the province’s 2021 budget. The budget does not change corporate income tax rates, but does:
increase personal income tax rates on taxable incomes over $135,973, starting 2022
introduce a refundable physical activity tax credit
increase tax rates on tobacco and introduce a sugar sweetened beverage tax
This Tax Insights discusses these and other tax initiatives proposed in the budget.
In detail
Personal tax measures
Personal income tax rates
Effective January 1, 2022, the budget increases Newfoundland and Labrador’s personal income tax rates on taxable incomes over $135,973, as follows.
Brackets1 |
Rates |
|
|---|---|---|
2021 |
2022 |
|
$135,973 to $190,363 |
17.3% |
17.8% |
$190,363 to $250,000 |
18.3% |
19.8% |
$250,000 to $500,000 |
18.3% | 20.8% |
$500,000 to $1,000,000 |
18.3% | 21.3% |
> $1,000,000 |
18.3% | 21.8% |
|
||
How much more tax?
The following table shows how much more tax you will pay in 2022, at select income levels, assuming all your income is interest or ordinary income (such as salary) and only the basic personal tax credit is claimed.
Taxable income |
Taxes payable1 |
Additional |
|
|---|---|---|---|
2021 |
20222 |
||
$1,000,000 |
$481,857 |
$504,274 |
$22,417 |
$500,000 |
$225,357 |
$232,774 |
$7,417 |
$400,000 |
$174,057 |
$178,974 |
$4,917 |
$300,000 |
$122,757 |
$125,174 |
$2,417 |
$200,000 |
$72,064 |
$72,481 |
$417 |
|
|||
Top personal tax rates
Top combined federal/Newfoundland and Labrador personal income tax rates, after taking into account the personal income tax rate increases for 2022 (see above), are shown below.
Top combined federal / Newfoundland and Labrador rates |
2021 |
20221 |
||||
|---|---|---|---|---|---|---|
> $216,511 |
$216,511 to $250,000 |
$250,000 to $500,000 |
$500,000 to $1,000,000 |
> $1,000,000 |
||
Ordinary income & interest |
51.30% |
52.80% |
53.80% |
54.30% |
54.80% |
|
Capital gains |
25.65% |
26.40% |
26.90% |
27.15% |
27.40% |
|
Canadian dividends |
eligible |
42.61% |
44.68% |
46.06% |
46.75% |
47.44% |
non-eligible |
44.59% |
46.31% |
47.46% |
48.04% |
48.61% |
|
|
||||||
Physical Activity Tax Credit
Starting in the 2021 taxation year, a new Physical Activity Tax Credit will provide a refundable tax credit of up to $2,000 per family, for families participating in eligible sport and recreational activities (maximum value is $174 per year).
Business tax measures
Corporate income tax rates
Newfoundland and Labrador’s corporate income tax rates will remain as shown in the table below. The table also shows combined federal/Newfoundland and Labrador corporate tax rates.
Federal and Newfoundland and Labrador |
NL |
Federal + NL |
|
|---|---|---|---|
General income and M&P income |
15% |
30% |
|
Canadian-controlled private corporations (CCPCs) |
active business income to $500,000 |
3% |
12% |
investment income |
15% |
53.67% |
|
Other taxes
Sugar sweetened beverage tax
The budget introduces a sugar sweetened beverage tax, at a rate of 20¢ per litre, effective April 1, 2022.
Tobacco tax
Effective June 1, 2021, tobacco tax will increase by 3¢ per cigarette and 6¢ per gram of fine cut tobacco; the rebate rate for Labrador Border Zones will increase by the same amounts.
Electric Vehicle Adoption Accelerator Program
The budget announces a new program that will provide a $2,500 rebate to residents who purchase an electric vehicle.
Harmonized sales tax (HST)
The budget announces the government’s intention to evaluate increases to the HST.
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